Visa Discloses All of Its Stake in Mobile Payment Startup Square
Shares of Square Inc rallied on Friday after an announcement from Visa Inc which revealed how much the company has invested in the Jack Dorsey-owned mobile payments startup. In early morning trades, Friday, shares reached a high of $9.84, which is up a whopping 13 percent above its IPO price, which was $9 per share (at launch in November). Within only a matter of hours, though—by mid-afternoon—the stock lost a little momentum.
At the same time, Visa shares also improved 2.7 percent to reach $70.29 per share.
Originally, the intent was disclosed on Thursday, raising some concern over Visa’s plans with Square, which was founded and currently run by Twitter CEO Jack Dorsey. Previously, it had only been announced that Visa would invest privately, when it purchased its first stocks in April of 2011. Since then, Visa has not made any moves—nor made any nod for a future move—to purchase more shares of Square.
Other companies have also disclosed similar notes regarding their present ownership of any Square shares; this includes JPMorgan Chase.
But, on Thursday, Visa said, in a regulatory filing, that it now owns approximately 4.19 million Square Class B shares. These shares are not trade on public exchanges.
Altogether, though, the company also has the option to convert these shares to roughly 3.52 million Class A shares. If they do opt for this, the conversion would result in Visa holding a 9.99 stake in the publicly traded Square venture; investors typically only their Class B shares to Class A shares when they have the intent of selling.
As a matter of fact, Wedbush Securities managing director Gil Luria comments, “Visa is not in the business of owning publicly-traded companies. Clearly, they’re not interested in owning Square, either.”
He also goes on to recall the adage: “keep your friends close and your enemies closer,” nodding to the idea that, perhaps, Visa is just trying to keep the waters calm.
While Visa now owns nearly 10 percent of Square’s publicly traded base, their holding makes up only about 1 percent of Square’s overall share base. At time of print, the exact figures of Visa’s stakes had not been disclosed.